Share of female executives in SMEs drops to 16 %

• Number of women-led enterprises drops slightly by 30,000 on previous year to 608,000
• Low female entrepreneurial activity is main reason for persistently low share
• Share of graduates among women entrepreneurs up sharply

The number of SME businesswomen dropped again last year. Of the approx 3.8 million small and medium-sized enterprises in Germany, only 16 % or 608,000 are currently headed by women (2020: 16.8 % / 638,000), as illustrated by a special survey recently conducted by KfW Research on the basis of the representative KfW SME Panel. That means the share of women is a good 3 percentage points lower or around 100,000 enterprises fewer than its previous high of 2013 (19.4 % / 700,000).

The trend in the SME sector has thus decoupled from that of large enterprises in Germany. It is true that the legally mandated female quotas are being achieved only in part, but the trend is clearly pointing upwards. The share of women on both management and supervisory boards of publicly listed companies that fall under these regulations recently grew to 14.1 % and 35.9 %, respectively. But the hope that this could also stimulate the advancement of women to executive positions of SMEs remains unfulfilled thus far.

A major reason for the low share of female executives in SMEs is the generally low entrepreneurial activity in Germany, which has dropped significantly since the turn of the millennium. In 2020 the number of new female entrepreneurs was 205,000. It is therefore highly unlikely that the executive floors of SMEs will become more female in the short term.

“If you want female bosses, you need female entrepreneurs and women in all areas and sectors of the economy”, said Dr. Fritzi Köhler-Geib, Chief Economist of KfW. “Yet regrettably, here we are again on another International Women’s Day with the share of women executives in SMEs even dropping from what is already a low level. In addition to the ongoing ‘traditional’ division of tasks relating to household and childcare, gender stereotyped training and career choices also continue to negatively influence women’s entrepreneurial appetite and often cause them to work in the services sector, which has been hit particularly hard by the coronavirus crisis. These aspects need to be addressed.”

The economic importance of women-managed SMEs in Germany should not be underestimated. They employ 3.4 million workers, train 100,000 young people, generate a total of EUR 331 billion in turnover and invest EUR 15 billion in new plant, equipment and buildings. In this way they make a substantial contribution to SMEs’ overall economic power, but one that is disproportionately low in relation to their 16 % share of all small and medium-sized enterprises. No upward trend has been observed here in the past 10 years either. What is crucial is the type of businesses women are usually in charge of. Most are small businesses which mainly operate in the services sector (89 %). By contrast, only four per cent of all women-led businesses operate in the manufacturing sector.

What is noteworthy, however, is that female graduates appear to show a growing interest in managing a small or medium-sized enterprise. At the moment, 58 % of female SME owners have a university degree. That is a more than noteworthy increase of 18 percentage points in the past eight years. At the same time, a rather more sideways movement has taken place among male owners of small and medium-sized enterprises (43 % had a tertiary degree in 2021 vs. 46 % in 2013).

The current analysis by KfW Research on female SME entrepreneurs is available at www.kfw.de/fokus